Intranet spending may double

Spending on corporate intranets will double this year to $8.45 billion, and software and services
revenue will grow faster than hardware sales, according to a study to be released next week.

"The market is surprisingly large and robust for such a relatively young
market" according a draft of the report from CAP Ventures, a consulting firm that
specializes in document management. "It appears that intranets are actually
something of a consolidation of technologies and efforts that have been
ongoing for a number of years," the report states.

Projecting 50-percent annual growth through the end of the decade, CAP
dubbed 1997 as a "spurt year," when growth will hit 100 percent. But while
hardware and system software topped spending in 1996, CAP expects
application development, services, and training to grow faster this year.

"If 1996 was the year when people were setting up systems to see what they
could do, 1997 is year for putting them to work," Bill Zoellick, author of
the report, told CNET. "These systems are being put in as backbones for
real business applications."

CAP's projections are somewhat lower than those from Zona Research, which puts the
market at $6.03 billion in 1996 and $12.1 billion in 1998.

"We found more detail, rather than saying the marketing is going to
Microsoft and Netscape" Zoellick said. "It's a much richer market with
more space for vendors large and small."

CAP sees slower growth in hardware sales because many companies have already
bought hardware for their intranets and because more are buying
Intel/Windows NT hardware rather than pricier Unix-based systems.

CAP predicts spending by communications firms will grow 160 percent this
year, the fastest among the industries it studied. Financial institutions,
government agencies, and printing and publishing firms will more than
double their intranet spending, the study predicts.

The CAP study combined two rounds of original research with reviews of other industry research. One round of original data was drawn from 550 organizations, the other
from 150 larger companies in industries where intranets are catching on. The more focused,
intranet-specific research was conducted in October.